The price of Australian Carbon Credit Units (ACCU) skyrocketed on the first trading day following the federal election, boosted by anticipation that the new Labor government led by Anthony Albanese will raise demand for emissions reductions.
ACCU prices rose nearly 20% higher on Monday, above 35 Australian dollar per tonne, marking the highest level since the former Morrison government’s surprise market intervention in March.
In response to Labor’s victory, carbon credit investors rushed to purchase ACCUs, anticipating that a reinforced Safeguard Mechanism would significantly increase demand for the offsets.
Australia has suffered from wildfires in recent years, leading to a deterioration of the air quality and the loss of animals and crops. Environmental issues are thus at the center of election campaigns. The newly elected prime minister, Albanese, vowed to end the “climate wars” and make the country a renewable energy superpower when he took office on Monday.
Labor’s climate policy will rely significantly on repurposing the Coalition’s existing Safeguards Mechanism to reduce emissions from industrial energy users. The scheme, introduced by Albott government in 2016, requires the country’s largest greenhouse gas emitters keep their emissions below a baseline.
It is expected that more industrial polluters will seek carbon offsets to comply with the Albanese government’s more strict emissions caps.
According to Reputex, carbon market analysts, a positive feeling among traders has returned following the election result, although the precise details of any policy changes must be worked out.
Earlier in March, former energy and emissions reduction minister Angus Taylor announced that carbon credit creators who have inked contracts with the government would be allowed to breach those deals and sell the credits to the open market for a better price. The move caused ACCU spot prices to plummet as the market for offset units became inundated with excess supply.
Prior to the unexpected intervention, ACCUs had traded on the open market for as much as AU$57 per tonne, driven up by hopes that Australia will eventually adopt stricter emissions reduction objectives and voluntary corporate pledges to decarbonization targets.